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A notebook PC? Nokia needs to focus

If there's one thing guaranteed to bring down a business, it is lack of focus. Nokia is destined to learn that lesson many times over if it continues to be all things to all people.

The company's CEO, Olli-Pekka Kallasvuo, told Finnish national broadcaster YLE last week that Nokia was actively looking into making notebook computers. What a mistake.

Here is a company that has a commanding lead of mobile phones sold worldwide, but not in the market that matters -- the United States. Here's a company that has gotten into the music download business and games. It also professes to be a mobile advertising network after buying an existing U.S. business.

And what did the downturn force the company to quickly do? Lay off talented people across Nokia operations worldwide and continue to seek voluntary redundancies.

No doubt the global recession had plenty to do with the decision to cut costs. But Nokia is a company that is mistaking tactic for strategy. It is spreading itself too thin without realizing that it risks its leadership status in mobile phones sold worldwide if it takes its eye off the ball.

The ball in this case is mobile phone manufacturing.

Not the same ring
Mobile phones have quickly become as commoditized as laptop and desktop computers. Hence the ability to charge premiums is quickly vanishing.

What gives a mobile phone model an edge in the U.S. is the exclusive deal with the carrier that subsidizes the cost of the device for the customer in lieu of a two-year, post-paid contract.

Another feature that can make a phone more attractive is the ability to build an ecosystem around it. Apple's iPhone is a classic example. Developers have created more than 20,000 applications for that smartphone, generating 500 million-plus downloads.

Can Nokia or any other phone manufacturer boast the same interest and response?

With the exception of the BlackBerry and the Android-backed G1 phone, no device on the market is a patch on the iPhone in terms of being the center of a mobile content and commerce universe.

Nokia should be focused on making sure it gets its U.S. strategy right. No global player can succeed by ignoring the world's most attractive mobile market.

India and China certainly boast more mobile phone connections -- SIM cards and prepaid plans, in particular. But their mobile content and commerce markets will take some time to gain more sophistication.

So it is in the U.S. where the battle for mobile phone superiority will be fought and won.

Nokia and its ilk have little brand recognition for their mobile devices except for the company name, itself a powerful brand. A savvy marketer would develop mobile phones with names that connote action or identify the target segment sought.

For example, the Nokia N97 is said to be a powerful phone, but perhaps it could have been christened with a name -- the Nokia Champion perhaps?

Apple did not call its phone the Apple A1. The iPhone had a catchy ring to it. And yes, Apple did branch out from computers to mobile phones. But here's something for Nokia to remember: the iPhone is a mini-computer and used as such. So the apple didn't really fall far from the tree.

What's the Ngame?
Nokia has had a jump on most mobile phone manufacturers worldwide with its Web-enabled Nokia Communicator series. It is a surprise why the company didn't push that model more aggressively in the U.S. The phone functions efficiently as a portable computer and is quite popular overseas.

But if recent actions are any indication, Nokia is still trying to figure out what it wants to be. One thing is for sure: It can't run with the hare and hunt with the hounds.

Only weeks ago Nokia announced that it would partner with eBay's Skype to offer the service to Europeans on its phone. Well, guess what -- the European wireless carriers were up in arms.

Now why would you want to take on your distribution channel? That's exactly what Nokia did.

Skype will undercut carriers in their bread-and-butter voice and text business by offering cut-throat rates for those services. It's no surprise that major European carriers may not carry those phones.

That partnership came months after Nokia announced with much fanfare Comes With Music -- its foray into music downloads, and another touchy subject for carriers seeking more content revenue.

You can't blame Nokia for not trying to diversify its portfolio or revenue base. But its expansion should not come at the expense of angering its vital distribution channel -- the carriers -- or losing sight of its core business.

Nokia and its competitors need to produce phones that excite customers and encourage them to upgrade each time there's a new model. These manufacturers must also work toward creating common standards for advertising and content to appear and play.

Going into notebook computer manufacturing will be a big mistake. HP, Dell, Toshiba, Lenova and Acer have that market cornered.

Perhaps Nokia sees an opening. Dell is contemplating the manufacture of smartphones. Acer has already launched eight smartphones. So there's no reason why the compliment shouldn't be returned, if that's the logic at Nokia headquarters in Espoo, Finland.

Well, don't say they were not warned.

All trends indicate that consumers are increasing gravitating to simpler and cheaper netbooks. These smaller laptops are typically priced between $300 and $400 -- one-third the price of an average laptop. Not surprisingly, the profit margins are lower, too.

A foray into the notebook business will only distract Nokia from its core business of manufacturing mobile phones that consumers like and would eagerly upgrade within the brand family.

The company must introduce more passion around its brand and create an aura of romance around each new Nokia phone model that debuts.

Now is the time for Nokia to ramp up its advertising and marketing budget and let customers and prospects know that in its quest for the next best thing Nokia hasn't forgotten it is already in the most exciting and fastest-growing communications segment -- mobile.